Updated version 4 - Dow expects its profits to exceed expectations thanks to rising prices and cost reductions.

Includes comments from the conference call and details from paragraphs 3, 12, and 13

Pooja Menon

Reuters, October 22 - Dow DOW.N forecast that adjusted core profits in the fourth quarter will surpass market expectations, as the company bets that rising polyethylene prices and its cost-cutting measures will offset the impact of increases in raw material and logistics costs caused by the Iran conflict.

After the conflict (link) escalated in late February, the blockade of the Strait of Hormuz disrupted the shipping of oil and petrochemicals, leading to tighter global chemical supplies and pushing up (link) prices of plastics and polymers.

Dow executives said during the earnings call that they expect global integrated polyethylene margins to improve by about 2 cents per pound in the fourth quarter.

According to data compiled by London Stock Exchange Group (LSEG), Dow expects adjusted core earnings of about 1.54 billion USD in the fourth quarter, higher than the analyst consensus of 1.38 billion USD.

https://www.reuters.com/graphics/IRAN-PETROCHEMICALS/POLYMERS/znvngmbmjpl/chart.png

This outlook builds on strong third-quarter results. Dow reported adjusted earnings per share of 71 cents, exceeding analysts’ estimate of 64 cents.

Driven by rising polyethylene prices, its Packaging & Specialty Plastics division saw sales climb more than 18% to 5.8 billion USD.

Dow has been focusing on cost reduction and improving profitability. The company has been reviewing its global asset portfolio, including plans to close higher-cost upstream units; earlier this year, it also announced plans to lay off around 4,500 employees, representing 13% of its workforce (link).

The Michigan-based company has already executed nearly 70% of its planned layoffs, and expects its restructuring plan to deliver over 200 million USD in benefits in the second half of this year.

CEO Karen S. Carter said that Dow remains on track to achieve over 1 billion USD annual core profit growth in 2026 and 2027.

https://www.reuters.com/graphics/DOW-RESULTS/STOCK/zdvxegdxkpx/chart.png

Executives said that Dow’s joint venture with Saudi Aramco 2222.SE, Sadara Chemical, has partially resumed operations, though logistics constraints continue to pressure liquid product output.

Sadara (link) temporarily shut its Jubail facility in March due to supply disruptions caused by the Iran war; Dow (link) stopped recognizing losses from the joint venture after reaching the maximum accounting liability limit in the first quarter.

(To make Reuters reports more accessible to non-native English speakers, Reuters has automated translations into several languages. Since automated translation may contain errors or lack essential context, Reuters does not guarantee the accuracy of translated texts and provides them solely for reader convenience. Reuters accepts no liability for any damages or losses arising from use of the automated translation function.)